Five ETFs Trading Below The Mendoza Line

According to Wikipedia, Mario Mendoza, the former baseball player whose futile exploits in the batter's box prompted George Brett to coin the term "Mendoza Line," was a lifetime .215 hitter, but the Mendoza Line is actually .200 or below. That's perfect because plenty of traders and technicians pay attention to a security's 200-day moving average as a pivotal point for trade entries or exits and these days, there are plenty of ETFs and ETNs trading below their simple 200-day moving averages. How many you ask? To be exact, 208, according to Finviz data. We parsed through the group, excluding leveraged inverse funds that have been punished during the market rally as well as bond funds that have fallen out of favor recently to find five ETFs below their respective Mendoza Lines that look more like value trap than value play. Here they are: 1) WisdomTree Japan Hedged Equity ETF DXJ: % below 200-day line: 3.7% Obviously, there is a reason for DXJ's recent hard times and that is the tragedies Japan has been trying to cope with since March. DXJ very could be the best ETF on this list as it does feel more like value proposition than value trap because any good news out of Japan would be a boon here. DXJ is different from the usual Japan-specific ETFs in that it tracks equities while employing a hedge on the fluctuations of the yen. 2) Guggenheim Airline ETF FAA: % below 200-day line: 8.5% Home to the artificial bounce on days when oil falls, FAA is the epitome of a trap, not just a value trap. Here's why FAA is a risky bet: Oil at $110 a barrel is very bad for airlines, we all know that. Oil at $90-$95 a barrel is still higher than what airlines had to pay last year. In other words, $95 oil is just less bad than oil at $110. It's not good, nor is FAA's chart. 3) iPath DJ-UBS Natural Gas TR Sub-Index ETN GAZ: % below 200-day line: 1.3% Alright, so there may be a technical trade here if GAZ can move above its 200-day moving average, but at this point, who wants to mess with natural gas? 4) Market Vectors Solar Energy ETF KWT: % below 200-day line: 1.5% KWT is looking especially vulnerable because its violation of its 200-day moving average is the most recent of the group highlighted and the chart is simply broken. The poor technicals in solar ETFs are backed by questionable fundamentals that revolve around investors' concerns regarding government spending (both in the U.S. and abroad) on solar projects. KWT may be the second-best idea on this list of DXJ, but what's that saying? 5) iShares MSCI Peru All Capped Index Fund EPU: % below 200-day line: 8.4% Yes, we've been taking EPU to task recently, but as we noted on Monday, there is still political risk here as Peru's presidential election is just six weeks away and there is the added thorn in EPU's side of concerns about China's demand for copper. Maybe, and that's a cautious "maybe," EPU is worth a look above $42.